Banker Cronyism Hits EU Ship Rocked by Brexit Torpedo
Finian CUNNINGHAM | 18.07.2016 | OPINION

Banker Cronyism Hits EU Ship Rocked by Brexit Torpedo

It couldn’t come at a worst time. Just as the European Union is reeling from the historic setback of Britain voting to leave the 28-member bloc, then comes the scandal of a former top commissioner taking a plum job at a Wall Street bank – to advise on the fallout from the Brexit.

If ever the grubby «revolving door» relationship between the EU bureaucratic elite and big business needed an illustration, it is the news of Jose Manuel Barroso taking up a post with the US investment giant Goldman Sachs.

Barroso was President of the European Commission from 2004 to 2014 – the top administrative position in the EU. He was in that job during the global financial crisis of 2008 when Goldman Sachs and other Wall Street banks are accused of precipitating the worldwide crash through unethical lending practices using subprime housing mortgages. Goldman Sachs was later fined $5 billion by the US Department of Justice for its «misconduct» in falsely selling off insecure debts that led to the stacking up a disastrous financial house of cards.

The repercussions from the financial crisis were felt no less in Europe where entire countries became mired in bankruptcy and subsequently public austerity policies to offset bank bailouts. Austerity that still dominates public policy – eight years after the initial crash.

Goldman Sachs reportedly had a direct hand in saddling Greece with ballooning national debt by knowingly concealing the country’s shaky finances. The Greek debt crisis has threatened to tear down the entire EU, which has only been averted by brutal public spending cuts and immiseration borne by Greek workers, families and pensioners. The Greek debt time-bomb was primed during the years up to 2010 when Jose Manuel Barroso was head of the EU’s de facto central government – the unelected European Commission based in Brussels.

Barroso, who was previously Portuguese prime minister, is taking up his non-executive chairman advisory role at Goldman Sachs with a brazenness that has infuriated EU governments.

He stepped down from the EC Presidency in 2014 when he was succeeded by Jean-Claude Juncker. Barroso claims that the two-year period removes any allegations of a «conflict of interest». But many observers disparage his claims as betraying a contempt for public office and public decency.

The French government in particular has slammed Barroso’s move into the private sector as «scandalous» and has called on the former EC president to resile from his new Wall Street perch.

France’s EU affairs minister Harlem Desir told his fellow parliamentarians: «It’s a mistake on the part of Mr Barroso and the worst disservice that a former Commission president could do to the European project at a moment in history when it needs to be supported and strengthened».

French finance minister Michel Sapin was scathing of what he inferred was Barroso’s self-aggrandizement. «If you have loved Europe, you shouldn’t do this to it, especially not now… But this doesn’t surprise me from Mr Barroso», added Sapin.

This week, French President Francois Hollande is to hold further meetings with German Chancellor Angela Merkel and Italian premier Matteo Renzi. It is the second summit between these leaders since the shock British referendum result on June 24, which called for Britain to quit the bloc after 43 years of membership.

The governments of France, Germany and Italy are at pains to maintain EU stability in the wake of the Brexit. There is palpable concern that the British decision to leave the bloc is unleashing similar anti-EU sentiments across Europe. Almost every member state has seen a dramatic electoral rise in political parties that are opposed to the EU project.

France’s National Front led by Marine Le Pen is probably the most significant of these anti-EU parties. From relative obscurity, Le Pen’s party has become a serious contender to win government power in next year’s presidential elections. The success of the anti-EU campaign in Britain has emboldened the political platform of France’s National Front, and those of like-minded parties in Germany, Italy and elsewhere.

What we are witnessing is a popular revolt across Europe against an unaccountable EU bureaucracy that is seen to be unresponsive to the needs of the bloc’s 500 million citizens. Cronyism and pandering to the profit interests of big business and financial elites, while the vast majority endure relentless economic austerity and neoliberal nostrums, seem to have become the «normal» functioning of the EU and its mainstay national governments.

The economic and financial rack of the EU on its citizens is also seen to be part of the Atlanticist agenda of increasing NATO militarism as demanded by Washington. Even though this agenda of antagonizing Russia has only compounded hardships on EU citizens from trade sanctions and counter-sanctions, as well as causing deep concern that a military conflict is looming from this slavish adherence to US-led policy.

Jose Manuel Barroso’s appointment by Goldman Sachs smacks of a tawdry sweetheart deal. As a former unelected senior EU official he was seen to have used his position as a public servant to advance the commercial interests of Goldman Sachs and other Wall Street banks in Europe, which, in turn, led to catastrophic economic and social impacts.

In advising his new employer on investment decisions following the Brexit, Barroso will avail of his EU contacts and insider knowledge that he gained while supposedly acting as a public servant – and no doubt be reimbursed with a lucrative salary for his services.

Barroso is thus the ultimate embodiment of EU bureaucratic cronyism in league with big business. Such elitist conduct – impervious to democratic accountability – is a major driving force for why the British electorate hit back with the stunning vote to reject the EU.

In the ferment of the Brexit result, Barroso’s flagrant grasping of opportunity at a Wall Street bank – a bank that has inflicted so much social pain on Europe – is a further lightning rod for public anger against the EU. And that is what alarms EU-supporting governments like the French, Germans and Italians.

The Portuguese politician is by no means the first to have slipped through the revolving door between EU senior public servants and big business. And it is probably not his move per se that is the reason for the outcry from EU governments. After all, the head of the European Central Bank Mario Draghi was previously a Goldman Sachs executive, as was former Italian premier Mario Monti. Current French economy minister Emmanuel Macron is a former private banker with Rothschild. Former British premier Tony Blair is believed to have been paid millions as a «consultant» for JP Morgan Chase since he left public office.

The list of big business-government cronyism in the EU goes on and on. (The same goes for the US.) «Conflict of interest» is a misnomer. The concern is actually a de facto policy of «confluence of interest» at the highest levels of purportedly democratic government.

Barroso’s offense in the eyes of EU governments is not so much that he is taking the well-established, if less-known, revolving door. Rather, it is the indelicate timing of the brazen move. It speaks of everything that citizens perceive as rotten about the EU, giving them further reason to revolt against incumbent governments.

And that is why, one suspects, EU politicians are really upset by Barroso grabbing a sweetheart deal at Goldman Sachs. It’s not really about ethics. Instead, it’s more about damage control to salvage the sinking EU ship in the aftermath of the Brexit torpedo.

RELATED ARTICLES